Alberta Liberal response to Question 2

Question: How would your party provide long-range, sustainable, predictable capital funding for Alberta’s large cities?

Answer:
Municipal Sustainability Initiative (MSI) funding has consistently fallen short every year since the program was launched in 2007. Originally intended to be a 10-year, $11.3 billion funding commitment, the program has never met its goal of providing stable and predictable long term funding because yearly funding allocations routinely fluctuate due to economic conditions or other factors.

In fact, Alberta is now 9 years into the original 10-year MSI commitment and just over 70% of the promised funding has been provided to date. Moreover, in the 2014-15 and 2015-16 fiscal years, the government has started to include the Basic Municipal Transportation Grant (BMTG) – which, in previous years, was always a separate line item in the Ministry of Transportation budget – in its MSI calculation. This sleight of hand has been used twice now to artificially inflate the government’s already below promised MSI numbers, with municipalities being no further ahead on account of the government not replacing the BMTG with new money.

Former Premier Ed Stelmach previously promised to ramp up total MSI funding to $1.4 billion annually starting in 2010-11, but never even came close to fulfilling that promise during his time in office. Then, former Premier Alison Redford tried to one up him by promising to make it $1.6 billion annually starting in 2014-15. The MSI budget estimate for 2015-16? $879 million – with 41% of that figure coming from the BMTG.

An Alberta Liberal government will address the municipal funding shortfall by redistributing on a regional basis the roughly $1.6 billion in industrial and linear tax revenue that is generated in the province annually. This tax revenue comes from the equipment, machinery and pipelines of the oil and gas industry, which is located primarily in rural Alberta. Presently, close to 95% of that tax revenue stays in rural Alberta to benefit a relatively small number of people.

An Alberta Liberal government will also stabilize the province’s finances – and, by extension, those of municipalities – by introducing a fair, multi-rate and continuously progressive personal income tax system and adjusting the general corporate income tax rate.

An Alberta Liberal government will also transform Alberta’s existing carbon levy on large emitters by applying it to actual emissions rather than emission intensity. The proceeds from that levy will be split evenly between a green municipal transportation fund and a green technology fund. Phased in over four years, it is estimated that by year four the levy will generate roughly $900 million annually for municipal transportation initiatives. Calgary’s share of that $900 million will be roughly one-third, with one-third going to metro Edmonton and one-third going to other municipalities. That translates to $300 million a year for LRT funding for both of Alberta’s big cities – enough to pay for roughly 3 kilometers of LRT track per year.

Through the development of city charters, an Alberta Liberal government will also grant Calgary and Edmonton new revenue generating powers, subject to specific limitations. In Ontario, for example, the City of Toronto is authorized through its own charter to generate some measure of additional revenue, but is specifically prohibited from obtaining that through sources such as an income tax, wealth tax, gas tax or a general sales tax. Some have suggested that referendums would need to be held in Calgary and Edmonton to allow residents to either approve or deny the adoption of any new taxes or fees. Alberta Liberals believe that such an accountability mechanism already exists in the form of the next municipal election. Like any other level of government, Alberta Liberals believe that municipal voters can and should use the ballot box to keep their politicians in check and ensure that taxation levels do not become onerous.